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AI and Virtual Influencers Enter the Regulatory Spotlight in the USA

Lil Miquela, Shudu.gram, and Itskamisworld are amongst the influencers that will start being regulated by the FTC in the USA. Learn more about it.

Erika Hubert
August 2023
Legal Lingo

There is a rapid growth of influencers with virtual identities, including AI-generated influencers. These virtual creators are growing in influence, especially on Instagram and TikTok and it has led to increased followers, brand partnerships, and overall market value. Some known profiles are Lil Miquela, Shudu.gram, and Itskamisworld. This topic is increasingly being discussed by legislators around the world.

No later than 26 July this year, the Federal Trade Commission (FTC) updated its Endorsement Guides to include virtual influencers. One of the points that got the most attention is that the definition of endorsers was updated to include what “appear[s] to be an individual, group, or institution.

Virtual influencers may qualify as endorsers if they express opinions or beliefs that consumers may interpret as reflecting someone other than the advertiser. Because of that, they’ll need to comply with the same endorsement rules as regular influencers.

According to some experts in the area, virtual influencers created by a brand itself may be exempted from some of the rules as they could potentially be seen as a spokesperson for that specific brand.

As a consequence, virtual influencers will need to endorse products in a way that makes sense considering their “virtual nature” and avoid making personal experience claims, be clear about their connection to the brand(s) endorsed, and be transparent about the characteristics of the service or product endorsed.

The FTC expects advertisers to be responsible for and monitor the actions of their endorsers and also expects endorsers to follow the guidelines and legislation in place. Platforms like TikTok have also taken steps to ensure transparency, requiring clear disclosures for synthetic or manipulated media.

These changes are a welcomed step towards better consumer protection and fair marketing practices. It also demonstrates a regulatory trend that is quickly spreading around the world, where the companies or persons behind the AI-generated content are required to comply with marketing and consumer protection laws and regulations. To be continued!

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